Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Each time a financial transaction occurs, you must record a journal entry that includes which of the following?

Only credits for revenue transactions

At least one debit and at least one credit

Only a single debit or a single credit

Only debits for expense transactions

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Verified step by step guidance

Understand the concept of double-entry accounting: In financial accounting, every transaction must be recorded in at least two accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains balanced.

Identify the components of a journal entry: A journal entry must include at least one debit and at least one credit. This is a fundamental rule of double-entry accounting.

Analyze the options provided: The first option, 'Only credits for revenue transactions,' is incorrect because revenue transactions also require a debit entry to balance the credit. The third option, 'Only a single debit or a single credit,' is incorrect because every transaction must have both a debit and a credit. The fourth option, 'Only debits for expense transactions,' is incorrect because expense transactions also require a credit entry to balance the debit.

Select the correct answer: The correct answer is 'At least one debit and at least one credit,' as this aligns with the principles of double-entry accounting.

Apply this knowledge to future problems: Always ensure that every journal entry includes at least one debit and one credit, and that the total debits equal the total credits to maintain the balance in the accounting equation.